Online Advertising Price: CPC, CPA, and CPM

Advertisers and publishers put a lot of effort into increasing the desired profit. The pricing model plays a big role here.

CPM, CPC, and CPA are the three main ways to calculate the advertising cost. What is the difference and which one to use? Let’s figure out.

What are CPC, CPA, and CPM?

CPC means cost-per-click. Payment is made only when the user clicks on the ad, regardless of the amount of impressions and conversions.

CPM stands for ‘cost per mille’, meaning the cost for every 1000 impressions. The site user is not required to perform any actions. The publisher guarantees only the display of ads on the site.

CPA is ‘cost per action’ or cost per acquisition. Here, the budget is spent only on conversions. The target action is determined by the advertiser. This can be a page click, purchase, subscription, etc.

Why is CPA important and how to calculate it?

We have already discussed what CPA is. But there are few other things to know about this pricing model.

CPA is the most important metric for every advertiser. No matter what your ad format or payment scheme is. CPA shows how much a single conversion costs you, that is, attracting one customer, subscriber, or buyer. The formula is as follows:

CPA = total ad spend / conversions

Best pricing model for advertisers

As an advertiser, how do you choose the right pricing model for a campaign?

First of all, it depends on the ad format. For some, there is a single method, and others support several at once. To decide, we recommend testing different options and see what is more profitable. What else to consider?

CPC is well suited for initial ad testing and target audience evaluation. If users don’t click on the ad, you don’t lose money. At the same time, the audience can still remember the offer. However, if the advertising is successful, this pricing model will quickly become very expensive.

CPM is a great option for low-budget campaigns. If users get interested, you will not pay more than the CPM rate. But if you fail, there will be no discount either. The advertiser must also clearly determine the number of impressions per day.

CPA is traditionally the most expensive model, but the risks are very low: one pays only for successful leads. For the rest of the time, you can get thousands of free impressions for brand awareness.

Best pricing model for publishers

And what pricing model is most profitable for publishers?

CPM is a predictable and convenient method if the webmaster has consistently high traffic volumes. Advertisers are glad to have wide brand awareness. But at the same time, it is important to constantly maintain audience engagement.

CPC can attract more advertisers than CPM since it brings more measurable ROI and collects more data about the target audience. However, before the tests you can’t predict how many people will click on the ad.

CPA is considered the least risky model for advertisers. Besides, the preparation of CPA campaigns takes a lot of time and resources, so the cooperation with you as a publisher may last longer than with CPM and CPC.

Advertising network: yes or no?

It is extremely difficult to launch a successful ad campaign in 2021. We recommend that both advertisers and publishers contact advertising agencies such as Galaksion for several reasons:

• Experience. Over the years, many customers pass through the advertising network. Employees can immediately understand how to structure the work as efficiently as possible in each case.
• Technical base. Large agencies have powerful, expensive equipment which one cannot maintain at home. It helps monitor ad traffic simultaneously around the world.
• Reliability. Advertising networks know how to check webmasters’ sites and advertisers’ offers before starting work. You do not have to worry about low-quality services and scammers.

We hope this information was useful! The article was written in partnership with Galaksion advertising network.